By Myrna M. Velasco
State-run Philippine National Oil Company (PNOC) is in preliminary discussions with Israeli and Indonesian firms on the targeted setting up of “strategic reserve” for the country’s oil needs in case of emergency.
The Israeli firm that had shown interest in the venture was scheduled to make a visit with PNOC President Reuben S. Lista last month, but he qualified that discussions are still at very initial stages.
Further, an Indonesian company PT Kaltimek had also exhibited initial interest in the state-run firm’s targeted oil facility; and had been setting a meeting with PNOC officials.
Beyond these two firms, the state run firm also had previous discussions with Dubai-headquartered Lloyds Energy on prospective investments on liquefied natural gas as well as ventures in the downstream oil sector.
Following the September drone attack on the oil facilities of Saudi which triggered market jitters on supply, PNOC had been tasked by the Department of Energy (DOE) to undertake a feasibility study on the proposed oil stockpile of the country – including the possibility of setting up a floating oil storage facility.
The government-run company indicated that it will likely complete the study by the end of the year or early part of next year – and it will only be known that time how the planned oil stockpile will be designed and implemented.
But as initially sounded off to the Senate committee on energy, the planned “strategic reserve” could start with floating storage; then a possible onshore stockpile facility over the longer term.
It is no secret that the government-owned company as well as its subsidiary PNOC-Exploration Corporation (PNOC-EC) had been targeting to import diesel since last year, but questions on storage and distribution networks hobbled the venture.
On the “oil stockpile” plan, there is no clear direction yet how the government will carry it out, especially since the proposal of the legislative is just for the country to have “oil diplomacy arrangements” with ally-countries and not necessarily to set up a physical storage facility in the Philippines.
That fundamentally differs with the “oil storage” plan that both the DOE and PNOC had espoused, hence, it is worth monitoring how the entire investment trajectory will eventually shape up.
In other countries, oil stockpiles are just reserved for “extraordinary circumstances” and not being utilized for ordinary market trading – and they also adhere to stockpile volumes as required by international organizations like the International Energy Agency.